The boss of Tesco has said the supermarket firm is witnessing a “gentle improvement” in consumer sentiment amid easing food and drink inflation.
It came as the retail giant said shoppers have bought larger volumes of groceries for the latest quarter due to the improving backdrop.
Shares in the company ticked higher in early trading on Friday morning as a result.
Tesco revealed on Friday that total retail sales grew by 3.4% to £15.3 billion in the 13 weeks to May 25, compared with the same period last year.
This came on the back of a 5% increase in food sales, with high demand for fresh produce helping to drive higher sales volumes.
It added that sales of Tesco Finest products were “particularly strong” as shopper demand for premium products grew despite continued pressures on household budgets from higher mortgage and rental costs.
Tesco said it saw more shoppers switch to the grocery giant from other UK “premium supermarkets” over the quarter.
Ken Murphy, chief executive of the business, said: ” Our sense is that there is a gentle improvement, ongoing improvement in customer sentiment.
“We have seen improving volume growth for a number of months and think things like the increase in the National Living Wage has been good for consumers.”
We’ve continued to build momentum in the business, with strong volume growth across the UK, Republic of Ireland and Central Europe supported by easing inflation
Ken Murphy, Tesco chief executive
Read MoreTesco said it expects to deliver an operating profit of at least £2.8 billion for the current financial year, holding its targets set in April.
Mr Murphy added: “We’ve continued to build momentum in the business, with strong volume growth across the UK, Republic of Ireland and Central Europe supported by easing inflation.
“Our market share reflects this, growing more than at any other time in the past two years, with customers switching to us from other retailers, shopping with us more often and with more in their baskets.”
Julia Palmer, partner at Begbies Traynor, said: “In a retail landscape that remains as challenging as ever, Tesco’s positive performance in the first quarter is testament to its enduring appeal for consumers.
“Tesco’s strategy of providing value during the cost-of-living crisis has led to notable market share gains, particularly in the UK and Republic of Ireland.”
The results announcement came ahead of the retailer’s annual general meeting, where Mr Murphy is expected to face scrutiny after receiving a £9.93 million pay package for the past year.
It compared with a £4.44 million total pay deal for the previous financial year and means the boss has been paid 431 times the wage of the average Tesco worker – £23,010.
